Home Repossessions Pummeling Pawtucket's Plunging Municipal Cash Flow

In Pawtucket, Rhode Island, The Providence Journal reports:

• Investors stuck with bad loans and people losing their homes because they have fallen behind on their mortgage payments aren’t the only victims of the subprime lending crisis, according to city officials. The city, too, is being hurt by the wave of foreclosures [...] . Tax revenues have plunged because banks that foreclose on delinquent borrowers don’t have to pay taxes on the foreclosed property until it is sold to another buyer, Finance Director Ronald L. Wunschel said in an interview. By state law, Wunschel said, banks are exempt from paying property taxes until a deed is recorded indicating that the foreclosed property has been sold. At that point, all back taxes are due and payable. But, until then, the city receives no revenue from foreclosed properties, Wunschel said. As a result, he said, the recent wave of foreclosures has created a serious cash crunch for the city, contributing heavily to the nearly $1 million deficit that Pawtucket is facing in the current fiscal year.

For more, see Pawtucket hurt by foreclosures. delinquent tax problem